Iraq joined a global transparency initiative Sunday in a bid to heal its reputation as a nation plagued by corruption and misuse of its vast oil wealth.

Ranked fifth from the bottom of Transparency International's corruption list of 180 nations, Iraq is in the process of signing deals with foreign oil companies it hopes will catapult it to major producer status.

Iraq signed on the Extractive Industries Transparency Initiative, which establishes a worldwide standard for transparency in oil, gas and mining by pushing companies to disclose what they pay in taxes and royalties to governments, and for governments to disclose the receipt of such payments.

Today we announce (that Iraq is) joining the Transparency Initiative, which is dealing with oil and gas, the most important resources of Iraq, Prime Minister Nuri al-Maliki said in a speech to government officials, World Bank representatives, and other groups.

EITI, based in Oslo, Norway, describes itself as a coalition of civil society groups, companies, governments, international organizations and investors focused on good governance in resource-rich countries.

Torn by years of war and sanctions, Iraq relies on oil for 90 percent of government revenues and is contracting with global majors to refurbish its neglected oil infrastructure and develop some of the world's largest remaining oilfields with the hope of becoming a leading producer.

It has the world's third largest oil reserves, but is currently just the 11th-largest producer. Deals agreed in recent weeks could boost daily output from 2.5 million barrels per day to around 12 million bpd in six years.

The Oil Ministry is managing most of the downstream works in the country and 90 percent of the budget comes from these activities, so this is one of the reasons why we are keen to join this initiative, oil minister Hussain al-Shahristani said.

As a permanent member of EITI, Iraq will be required to issue annual reports on crude production and revenue and oil companies working in the country will have to submit reports on production. Officials said they expected Iraq to become a permanent member in March.

We want to join this institution to reform the globally damaged reputation of Iraq and the Iraqi government as a country full of corruption, Oil Ministry inspector general Alaa Muhyiddin told reporters.

Iraqis complain bitterly about government corruption which they blame for the poor state of electricity, water and other basic services. Muhyiddin said the government wanted to crack down on smuggling operations by well-organized gangs and the theft of Iraqi crude.

We have decided to hit with an iron fist anyone caught smuggling Iraqi oil, he said.

(Editing by Jim Loney and Dan Lalor)

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